DOCx

International Political Economy: An Introduction to Approaches, Regimes,
and Issues



Timothy C. Lim, Ph.D.
































International Political Economy: An Introduction to Approaches, Regimes,
and Issues © 2014 Timothy C. Lim, is licensed under a Creative Commons
Attribution (CC BY) license made possible by funding from The Saylor
Foundation's Open Textbook Challenge in order to be incorporated into
Saylor.org's collection of open courses available
at http://www.saylor.org. Full license terms may be viewed
at: http://creativecommons.org/licenses/by/3.0/legalcode
.
Table of Contents Chapter 1: Demystifying the Complex World of International Political
Economy
Introduction
What Is Globalization (and Why Is It Important)?
Why Do Scholars Disagree?
The Social World as an Open System
Defining International Political Economy: The First Step
Putting the Global in International Political Economy
Globalization: A Reprise
Political Economy and the State-Market Dichotomy
International/Global Political Economy Defined (Finally!)
The Significance of Power
Conclusion Chapter 2: Foundational Theories of IPE: An Unconventional Introduction to
Mercantilism, Liberalism, and Marxism
The Three Major Perspectives of IPE: Still Going Strong? Chapter 3: Contemporary Theories of International Political Economy
Introduction
Hegemonic Stability Theory
Post-Hegemonic Theories
Two-Level Games and IPE
Constructivist Approaches to IPE
Conclusion Chapter 4: Politics, Economics, and Cross-Border Trade
The Long History of Cross-Border Trade
Basic Concepts and Data on Cross-Border Trade
Cross-Border Trade: A Still Contentious Debate
The Rise of "Free" Trade in the 20th Century, Part I
The Rise of "Free" Trade in the 20th Century, Part II
Regional Trade Agreements
A Quick Conclusion Chapter 5: The Global Financial System
Introduction
The Global Financial System: The Basics
Constructing the U.S.-Led Postwar Global Financial System
Crises and the Global Financial System
Conclusion Chapter 6: Transnational Production, Foreign Direct Investment, and
Economic Development
Introduction
Transnational Production: Definitions, Concepts, and Basic Data
Explaining the Transnational Production Structure
Transnational Production, FDI, and Economic Development
Transnational Production and State-Firm Interactions
Conclusion Chapter 7: Inequality, Poverty, and Exploitation in the Global Economy
Inequality, Poverty, and Exploitation: An Overview
Basic Concepts and Data on Inequality, Poverty, and Exploitation
Why Does Poverty Exist?
How Can Poverty Be Defeated? Beyond Conditionality
Poverty and Capitalism: An Unbreakable Bond?
Hyper-Exploitation: The Resurgence of Slavery in Africa
Summing Up: Marxist and Liberal Views of Capitalism, Exploitation, and
Poverty
Capitalism Is What People Make It
Conclusion Chapter 8: Governance in the Global Economy
The Need for Governance
What Is Global Governance?
The Significance and Relevance of Global Governance
Transnational Organizations and Global Governance
The Main Points of Contention in the Global Political Economy
A Very Brief Conclusion Bibliography Glossary Chapter Answers:
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 1
Demystifying the Complex World of International Political Economy Introduction There are many books on international political economy, or IPE for
short. Not surprisingly, each contains its own assumptions and views about
the key concepts, issues, and concerns of IPE. Sometimes the authors of
these various books hold the same assumptions and share the same, or at
least very similar, views about how the world works. Sometimes they don't.
In fact, as we will see in a few of the chapters that follow, the
perspectives of the people who write and think about IPE are often
dramatically, if not fundamentally, different. You may already have an
inkling that mainstream economists and radical economists (e.g., Marxists)
do not agree on many central issues and concepts. But even among those who
seem to share basic ideas, there can be sharp disagreements. Within the
broad school of neoclassical economics, for example, there is an intense
and still-unresolved debate between those who believe that markets must be
left alone and those who believe that government intervention in markets is
sometimes necessary. This debate is encapsulated in the ideas of, and
debates between, two famous economists-John Maynard Keynes and Friedrich
Hayek. Keynes, who died in 1946, is best known for his ideas about the
importance of "pump priming," which refers to deficit spending by
governments in times of recession or depression. The goal is to increase
demand and create a virtuous circle: higher demand means more need for
workers, more workers keeps demand strong, and strong demand keeps the
economy going. Keynes's ideas, it is important to note, are far from dead:
the global recession that began around 2008 spurred the United States
government to engage in stimulus spending-a type of pump priming-and other
policies (including maintaining historically low interest rates and
quantitative easing). These are all Keynesian policy prescriptions. Hayek,
by contrast, expressed profound confidence in the ability of markets to
take care of themselves, and saw only a very limited role for governments
at the national level, one based on ensuring a relatively stable supply of
money. Hayek is most famous for his classic book, The Road to Serfdom,
first published in 1944. In The Road to Serfdom-which has become one of the
bibles of libertarianism, along with Ayn Rand's Atlas Shrugged (1957)-Hayek
argued strongly that government control of economic planning inevitably
leads to the loss of individual freedom. While his ideas were marginalized
in the 1940s and 1950s, they found a much more receptive audience beginning
in the 1970s; since then, Hayek's writings have developed a very strong and
even fervent following, especially among policymakers in the United States
and Great Britain.
Significantly, the debate between followers of Keynes and followers of
Hayek has been going on since the late 1930s. Think about this for a
moment: in seventy-odd years, mainstream economists have yet to reach
consensus on a fairly basic issue (i.e., Does stimulus spending work or
doesn't it?). Indeed, in an important respect, the disagreement today is
even stronger than in the past, when there were long periods in which one
or the other view held sway. While neoclassical economists continue to
debate a range of issues, it is important to emphasize from the outset that
neoclassical economics is not the same as international political economy.
As I will discuss in detail below, IPE is a distinct field of inquiry.
There is, to be sure, some overlap between the two fields-neoclassical
economics and IPE-but there are also areas of very strong divergence. One
of the most salient differences is embedded in the terminology itself.
International political economy considers politics and economics to be
inextricably intertwined, while neoclassical economics asserts that
economics and politics are-and should be-two essentially separate areas or
processes.
We will consider this issue in much more detail below. For now, it is
also important to emphasize that, as a field of study, IPE is much more
strongly connected to the discipline of political science than it is to
economics. The reason for this is clear: IPE is an outgrowth of
international relations, or IR for short. IR, a major subfield within
political science, has traditionally focused on the struggle for power
between and among states. Although a diverse and heterogeneous field in its
own right, IR has long been dominated by a particular theoretical
perspective known as realism. Realism, in turn, has long held a heavy bias
toward "high politics," which refers to all matters considered vital to the
survival of the state. In practical terms, this entails a near exclusive
focus on military-strategic issues. Economic concerns, therefore, are
relegated to the domain of "low politics" and, as the term implies, are
considered relatively unimportant. For many scholars, however, both the
dismissal of economic concern